While major Big Box retailers have struggled to keep pace with consumer-driven demands for instant gratification, Sears Holdings has come up with new innovations to anticipate and serve shoppers with a new one-day ground delivery service supported by a dynamic DC network.

When an industry is changing rapidly, companies must adapt in order to survive. In this whitepaper, a global publisher was seeking a partner that could mitigate risk and build a platform flexible enough for their shifting customer expectations. The solution enabled the company to rewrite their operations game plan and transform their supply chain.

Join our panel of leading economic and transportation analysts as they share their exclusive insight on where rates are headed and the issues that will be driving those rate increases over the next 12 months.

The price per gallon for diesel gasoline eclipsed the $4 per gallon mark for the fifth straight week, according to the Department of Energy’s Energy Information Administration (EIA).

For the week ending March 26, the EIA reported that the price per gallon is $4.147, which marks its highest level in three-and-a-half years, topping $4.145 per gallon from the week of August 25, 2008, when diesel prices were on the way down from record highs just weeks earlier, with the week of July 14, 2008 representing the apex for diesel prices at $4.764 per gallon.

The price per gallon moved up 0.5 cents from last week’s $4.142.
Diesel prices have gone up for 9 consecutive weeks and in 11 of the past 12 weeks, according to EIA data. And over the past 12 weeks, prices has risen a cumulative 31.9 cents. Prior to this week’s 0.5 cent gain, prices rose 1.9 cents, 2.9 cents, 4.3 cents, and 9.1 cents, respectively, in the previous four weeks.
Compared to a year ago at this time, the price per gallon is up 21.5 cents, which is down from comparisons in the mid-80s range just a few months ago. And while prices have largely been trending down prior to this recent increase, shippers have maintained that they are forecasting for steady fuel increases in their supply chain and transportation budgets should diesel prices continue to hover near or at the $4 per gallon mark.
The EIA recently reported that in its Short-Term Energy Outlook the 2012 average for diesel per gallon is now at $41.5, with 2013 pegged at $4.11. The 2011 average was $3.84.
As LM has reported, shippers continue to take steps to minimize the impact of fluctuating fuel costs. Over the years, they have maintained that this is imperative as higher diesel prices have the potential to hinder growth and increase operating costs, which will, in turn, force them to raise rates and offset the increased prices to consumers.
In a recent LM survey of about 345 shippers, there was some variation as to how much shippers planned on adjusting budgets, with 40 percent planning to raise or adjust freight budgets by 5 percent or less and 38 percent planning on a 6-10 percent hike. And 10 percent of shippers said they planned to modify budgets by 11-15 percent, followed by 5 percent planning on a 16-20 percent adjustment. Five percent on shippers said they intend to adjust budgets in the 16-50 percent range, and 4 percent intend on even more significant increases from 21-99 percent.

But adjusting budgets is only part of the solution when it comes to dealing—and living—with fuel price fluctuation, according to shippers.

“Right now we are looking at hedging diesel ourselves to see if it makes sense for us,” said Wayne Johnson, manager, carrier relations at Owens Corning. “This will involve us committing to a certain price on fuel at which pay to a certain rate at which point it is frozen at that rate for us. We are also focused on keeping our drivers on the road as much as we can and being profitable and not in detention, and we are also putting in more carrier pools and improving lead times to our plants from 45 minutes to the 20 minute range and get drivers in and out of our plants as quickly as we can.”

Other steps being taken by shippers to combat high fuel prices include things like focusing more on utilization and efficiency by doing things like driving empty miles out of transportation networks.

The price per barrel for oil is currently at $107.03 on the New York Mercantile Exchange. Prices rose $0.16 after Federal Reserve Chairman Ben Bernanke suggested that yesterday the U.S. central bank would continue its policy of low interest rates to help spur job creation and economic growth, according to an Associated Press report.

About the Author

Jeff BermanGroup News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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